Facebook Stocks Fails To Hit The Bull’s Eye, Initiates Mobile Ads To Boost The Investors

Facebook’s Mark Zuckerberg is trying to take the social networking site to a new level, following a blow in the firm’s stocks over the last two weeks.

Facebook’s stock crashed 40 percent down from its IPO of $38 and now stands at $22.86. Trying to generate revenue for the firm, Facebook initiated ads for mobile, which Mark hopes will be a boon for the sinking morale of investors and would also monetize its mobile traffic.

However, there are many analysts who believe that Facebook’s stock could go down to $15 or even less.

According to an article published in barrons.com, writer Andrew Barrey feels that Facebook’s business stays uncertain and it’s unlikely that the social networking site will hit off with focus on mobile ads.

Facebook is trying to monetize its services without compromising on the user experience. And as mobiles have a small screen, Facebook won’t get much chance to configure ads.

Currently, Facebook trades at price per earnings (PE) of 48 cents a share.

Facebook is valued at $61 billion, or $53 billion excluding estimated $8 billion in cash. The social networking site is clearly lagging far behind Google and Apple. According to Barron.com, Facebook’s shares do not make a good buy and stand at as little as $15. However, Wall Street’s consensus offer more optimistic estimate for Facebook, showing its earnings to rise 31%, to 63 cents a share in 2013.

Facebook has a slow growth rate. And problems in mobile advertising don’t seem to be going away anytime soon. So it’s doubtful that investors would want to put in money in the firm.

There’s another point discussed in the article. Facebook has also started to issue many restricted stock to its own employees, so that they stay within the firm. The social networking site had taken out $1.4 billion restricted shares last year, which accounted for around $500,000 per employee. Adding that to this year, the firm has issued $1 billion of its restricted stock.

These restricted stock units (RSUs) that employees have do not have stock options and could be out for sale anytime in the coming months.

As per Mark Zuckerberg, CEO, Facebook said that it’s the firm’s way to compensate.

However, people such as Mark Cuban, Investor, believe that Facebook pulled off its IPO at a high price of $38, to keep its revenue at the maximum, which did get it an impressive amount of $10 billion. He also stresses on the fact that the only ones who lost in the game were the shareholders who thought they could pass the stock on to someone who will pay more.

Further, Cuban added that Facebook could boost spirits among its employees by merely reissuing stock, which can give better benefit to its employees.

Let’s take a look at how RSUs work-

Suppose Facebook offers 1,000 shares to its employees that have a value of $30. Now in case the price falls to $10, they will get $10,000, instead of initial $30,000 offered. This means that the plunging stock will give employees less value in shares, and that Facebook will give them lot more, say around $10 to make them feel as valuable as they were before its stocks plummeted.

Something similar had happened with Google in 2009. The firm lost more than twice the market cap valuation as compared to Facebook now, when the search giant simply repriced its stock options.

The big variation between Facebook now and Google then lies in the RSUs.

Facebook can’t change the price of RSUs, as the one who holds RSUs is only bothered about the current stock price. Instead, Facebook would just have to take out more shares at the new price.

RSUs it appears also have a taxable value upon issue, while stock options do not.

During that time, Google also had political cover for its move, as it was seen as a measure to cure errors of its own doing. Also it wasn’t the only firm going through economic slowdown that time.

So in case Facebook follows suit Google, it would anger many investors, which could also create long lasting rage with a breach of trust that would hurt the stock holders even more.

William Hambrecht, another investment banker and IPO expert feels that Facebook would get lot of criticism and could also lose credibility in case it tries to restore the value of its employees’ shares.

Coming back to the $15 stock price, majority of Wall Street analysts are optimistic about Facebook’s stocks. Many investors are just waiting for the lock-up on insider shares to end, which will only tell what the market response would be.

By then, it will also become clear as to how the social networking site plays its hand at RSUs.… Read the rest

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Next-gen Lumia 920, Lumia 820 Uncovered by Nokia

On Wednesday, at a press conference, Nokia made its Lumia 920 official, which on the contrary, resulted in a drop of the firm’s shares drastically.

Already undergoing trouble, launching Lumia smartphones with Windows 8 operating system is a hope for Nokia to sail through its troubled time as the firm faces competition.

But the plunge in stocks by investors has created a shaky situation, with rising doubts weather Nokia will be able to pull it off, particularly with competition in the market as Apple, Samsung and HTC also plan to launch their smartphones.

Nokia shares plummeted as much as 13 percent and were trading nearly 10 percent down for a share price of $2.55 at noon.

Let’s take a look at the smartphone’s specifications:

Starting with Nokia Lumia 920, the smartphone is designed with a PureView camera that can stabilize and decrease blur to offer clear picture. It has a touch screen feature, which works even when users wear gloves.

The smartphone is designed with an inductive charger, which lets users set it on a charging plate instead of fumbling with a micro-USB port.

The Lumia 920 also supports Windows Phone 8 DNA, and users can sync it with SkyDrive and Windows tablets.

Now with Lumia phones, users will also be able to use PowerPoint, Excel, and Word as it comes incorporated with Microsoft Office and Outlook.

The Lumia 920 is 0.4-inch in thickness and has a display of 4.5-inch.

The smartphone will also have a near-field communications (NFC) chip. There will also be a dual-core Snapdragon S4 1.5 Ghz processor and 32GB of on-board memory with 7GB in the SkyDrive.

Nokia Lumia is launched in a range of colors including red, yellow, silver, white, and black.

Second in the line, Nokia also announced the Lumia 820, which is designed with different-colored charging shells and matching headsets in red, yellow, white, blue, purple, gray, and black. So users get a lot of choice in terms of colors and can pick one that suits the best.

This phone has a screen size of 4.3-inch, a little smaller than the Lumia 920.

The Lumia 820 also boasts of a Snapdrgaon S4 1.5 GHz dual-core processor, with 8GB of on-board memory, and 7GB of storage in SkyDrive.

This phone is somewhat thinner as compared to the 920. It has a width of just 0.3-inch.

The pricing or the availability of the devices was not released.… Read the rest

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Facebook Co-founder Dustin Moskovitz Sheds Shares!

Three months ago when Facebook went public, the social networking site saw a drop in its stocks, which made many insiders sell their shares. The latest in the news is Dustin Moskovitz, co-founder, Facebook, who is shedding off his sizable stakes in the social networking site.

Moskovitz left Facebook in 2008 to find Asana. On Tuesday, he completed 12 different trades in 150,000-share increments during a two-week period starting Aug. 17, ending on Sept. 4, 2012.

As per multiple filings with the Securities and Exchange Commission, the 28-year-old entrepreneur and Facebook insider has reportedly sold 1.8 million shares for $34.5 million.  This accounts to around 450,000 shares of the social networking so far this week, reducing his hold to 6.15 million Class A stock, which has less voting than Class B stock. He has 126.2 million Class B shares. The Class B shares can be changed for sale to Class A shares at a one-to-one ratio.

The trades were completed at price ranging from $20.08 to $17.56 per share.

Earlier, last month, Peter Thiel, first outside investor of Facebook also dumped his remaining holdings in the social networking site with a gain of $395.8 million.

The news could be worrisome for investors as all insiders sell their shares. But thankfully not everyone is stripping off of their stakes.

Mark Zuckerberg, CEO, Facebook said in a filing that he is committed to hold all his stakes in the firm for at least another year.

Marc Andreessen and Donald Graham, Board members of Facebook also specified that they would only sell enough shares to cover their tax liabilities.

Facebook went public in May with an IPO of $38 a share. The social networking site saw a decline since then, following the speculation of other investors selling off their shares.… Read the rest

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Social Gaming Company Zynga Loses its Chief Creative Officer

Even as Zynga comes to terms with the round of multiple resignations, the latest one to follow suit is Mike Verdu, Chief Creative Officer of the social gaming company. Other executives who recently left the firm include chief operating officer, John Schappert, and general managers Alan Patmore, Eric Bethke, Ya-Bing Chu, and Jeremy Strauser. Verdu has handed in his resignation and plans to set up his own company. The creators of popular social games such as Farmville, Zynga’s stock prices have tumbled down to 20 percent of its peak value from the first half of the year.

In his parting blog post, Verdu thanks his colleagues at Zynga for all of their support and encouragement, and expressed pride on having seen the company transform into a “vibrant community of game designers, producers and creative leaders”. As Verdu transitions out and tries his hand at being an entrepreneur, his roles will be looked after by a team of three creative leaders from within the firm – Brian Reynlods, Tim LeTourneau, and Bill Jackson.

Although sources within the firm insist that Verdu’s departure is solely because he wished to create his own mobile gaming company, his timing could not be more unfortunate for Zynga. Zynga has blamed Facebook’s recent algorithm modifications for its poor performance in recent times, causing delays in releasing new products to market. The company, which was already battling tumbling stock prices, now finds itself without sufficient senior management, making it even harder to convince the 3000 odd employees to stay on. Even the recently authorized release of 43 million new shares as an incentive might not be adequate to retain employees in these troubled times.

Zynga went public in December 2011 and was initially valued at $8.9 billion. However, after the stocks took a beating, its value dropped down to $2.3 billion, on account of a weak earnings report. For now, the company will have to focus more on bringing out new products to the market after overcoming the delays and work towards maintaining faith among its employees about its future.… Read the rest

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Apple Stays the Most Valuable US Firm!

Revolutionizing the technology, smartphone, and tablet industry, Apple saw its stocks rise to a record price of $665.15 on Aug. 20, which gave the firm a market capitalization of $625.5 billion that is the highest ever for a US-based company.

Apple Inc., is all set to grow its stocks further as the firm plans to launch the third generation upgrade of its smartphone, iPhone 5.

Apple stocks jumped 16 percent in anticipation of a new iPhone and iPad Mini since July 26.

Considered the most valuable U.S. firm in history, Apple is believed to have room for further growth as the company’s stock trades at a discount to the Nasdaq Composite Index.

Investors value Apple at 15.4 times trailing 12-month earnings, while the average company in the 2,495-member Nasdaq trades at 16.5 times.

This growth in profit by Apple has left behind its share increase, contributing to the lower price-to-earnings ratio.

Apple stocks saw a rise of more than 80-fold in the past decade; while earnings per share increased more than 300-fold to $28.05 a share last fiscal year from 9 cents in 2002.

Many analysts believe that Tim Cooks, Chief Executive Officer, Apple will use $117.2 billion in cash to grow the company and invest in mobile devices, and the latest televisions.

Shares of Cupertino, California-based Apple are expected to rise to $721.39 over the next year, while many analysts believe that the firm’s stocks will rise above $1000.

Investors of Apple are counting on the success of the next iPhone that the company is rumored to release Sep. 21. Apple plans to unveil the latest version of the handset on Sept. 12. The company hopes to sell around 250 million units of the device over its life until the next innovation.

Besides the iPhone 5, Apple also plans to unveil a smaller, cheaper iPad this year, iPad Mini. The company is also in talks with U.S. cable companies about teaming up to carry live television and other content through an Apple-designed device.

As the Cupertino, Calif.-based company keeps on launching best-selling devices, the value of its shares and profit also increases.

The newer products by Apple such as the iPhone and the iPad, accounted for more than 60 percent of revenue in the last fiscal year, while the iPod’s share reduced to 6.9 percent.

Maintaining the same profit margins could be a challenge for Apple as the firm plans to enter television business, which has thinner margins as compared to other electronic devices.

Currently, Apple is dependent on more than just new products; the firm has made fortune through the sale of iPhones, which has doubled, and the sale of iPads, which has more than tripled in the past year, said Apple executives.

Apple is all set to expand its sales force and is ready to take better advantage of this opportunity, as the firm works on the development of its next iPhone 5.

The firm reaches out to a wide market by lowering down the prices of its old models of iPhones and iPads and continues to sell new versions at high price, which does bring profit.

In terms of market value, Apple stays ahead of next-largest Exxon Mobil Corp. by more than $200 billion. Microsoft held the No. 3 spot yesterday with $258.2 billion, even after trading as high as $616.3 billion on Dec. 27, 1999.… Read the rest

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Apple Stocks Hit New High After 4-Months Swoon

Stocks of Apple Inc saw a new rise Friday morning, just ahead to the release of new iPhone and a smaller iPad. After a dip of four months in stocks, this news was good for Apple, which is already the world’s most valuable company.

Apple Inc. saw its stock hit $648.19 in midday trading, before moving back to $648.11, which was up by $11.77, or 1.9 percent, from Thursday’s close.

Earlier, the firm’s stocks hit a high of $644 on April 10.

The market value of Apple is reported to be about $608 billion, which is almost 50 percent more than Exxon Mobil Corp., which is No. 2 at $408 billion.

Apple’s stock stumbled last month after the firm’s earnings report for the April-June quarter reported the slowest growth in more than two years. This marked the second time in 10 years that Apple missed the expectations of analysts.

Peter Misek, analyst, Jefferies & Co. moved up the target of his price on the firm’s stock to $900 from $800 on Friday, reporting the production of an “iPad Mini” in China. Misek’s belief was based on reports, which came out from Apple’s suppliers, contract manufacturers and contacts in China. He further said that Apple is believed to manufacture around 25 million iPads of all kinds in the current quarter, which the firm would raise from a previous estimate of 16 million, excluding the “iPad Mini.”

However, the Cupertino, Calif., company is tight-lipped about a new iPhone or iPad.

There have also been rumors about the launch of a smaller iPad this year. Various analysts believe Apple plans to make a cheaper tablet computer to make its mark in the market, which is selling the Google Inc.’s Nexus 7 and Amazon.com Inc.’s Kindle Fire, at a price of $199. The cheapest current iPad available in the market costs $399.

It is believed that the sale of iPhone 5 will hit the market late September. iPhone 5 is much anticipated phone, which is believed to be the biggest phone launched ever. This latest model of iPhone is rumored to have somewhat bigger screen with access to the latest wireless data networks in the U.S.… Read the rest

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Facebook Stocks Plunge to a New Low as IPO Lock-up Ends

Shares of the social networking site, Facebook saw a drop of nearly six percent from the day’s opening Thursday as the firm unlocked 271 million shares for trading. The stocks plunged to a new low and dipped below the $20 mark for the first time- nearly 50 percent of its Initial Price Offering (IPO) of $38.

Some analysts believe this trading to be a sign that investors and company’s insiders wanted to get rid of their investments on Facebook. The company seems to have lost its shine and has had a rough time since going public. The social networking site has left many investors anxious about whether the company would be a passing fancy or will recover as it earns revenue from advertising via mobile networks. However, the firm did meet expectations in its first public earnings report.

Facebook is reported to go down on 36 trading days, up on 25 and unchanged on one since going public.

A challenge has been set for Facebook to mon­etize its free service on a smartphone or tablet-sized screen, that too without annoying any of its users. Advertising through mobile phones also comes as a little hope, which can help the firm sail through smoothly.

Facebook is now attempting to make its mark and get stable as the firm recently started to test ads on the mobile devices and computers of users who haven’t liked the products being advertised. The social network labeled these ads as “sponsored”.

Despite the sharp drop in Facebook’s market value price in the last three months, early investors and analysts are still hoping for a boon by selling at the current price. Analysts are also positive that in the long run, Facebook will rise with its plans of advertising via mobile devices, settling all dark clouds. It has been a rough run for Facebook, but various analysts hold positive long-term views for the social network.

The Wall Street Journal also reported that employees who received Facebook shares as compensation will be able to sell their shares only by the end of the year.… Read the rest

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Facebook Stock Expected to See Shift Thursday, Will Investors Sell Shares?

Stumbled due to the slow growth of revenue, the plunge of Facebook stocks was not what many investors expected when the social network went public in May. However, there has been some speculation on the Wall Street that the Facebook stock could take a big hit this Thursday, which marks the first day that will let all investors and its directors sell their stocks to public.

Facebook saw a rocky initial opening, when the network took out its first opening report since going public in May. The social network saw a loss of $743 million, which also slashed down its share prices.

The social network went public with 421 million shares as part of its original offering. Out of that number, around 271 million shares are expected to be unlocked Thursday.

It is reported that Facebook’s less-than-perfect market performance may in fact help the firm with this problem. Investors who are looking to earn some money would be the only ones selling their shares, and as Facebook’s stocks have dropped from its initial price offering of $38, it is not expected to make more money.

There is also speculation that Facebook will unlock more shares in the coming months, as is expected that around 1.8 billion shares will hit the market within the next year.

The social network’s tiered system states that the employees who have received shares as compensation will also have them unlocked in the fall.

There are many analysts who have underestimated the impact that shares could have on Facebook.

Michael Pachter, analyst at Wedbush states that it would not look good only if high-level officials within Facebook sell their shares, which is not at all expected.

On Wednesday, shares of Facebook were closed at a price offering of $21.20, which went up for around four percent for the day, but was down by 44 percent for its IPO of $38.… Read the rest

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Facebook Makes Profit but Stock Tumbles

Facebook’s quarterly earnings revealed growth, but that wasn’t enough to maintain the numbers at the stock market, which fell by 11 percent right after the earnings were announced. This is the lowest that the company had witnessed ever since it has come in public offering following May.

The plunge clearly defines that despite good earnings, Facebook was unable to earn confidence of investors as far as its stepping in a particular type of business model is concerned. Not only Facebook but other companies who were dependent on Facebook for sales also witnessed a dip in their stocks.

In its present quarterly earnings, Facebook revealed that it sales have increased to $1.18 billion, more than what was expected. In this quarter, the company had spent three times more than what is spent last year, in order to expand its business.

Facebook’s chief executive Mark Zuckerberg now intends to step into mobile advertising, that too in a way. He and other executives cleared this intention on a conference call made on the occasion. The company is of the view that mobile industry is big and growing and Facebook wishes large profits from it in the future. But the only problem that the social networking will face is that of generating revenue as all its income comes from display ads, which are viewed largely on desktops or laptops.

“Our vision for platform is bigger than most people perceive,” Zuckerberg said. “I think we’re really much closer to the beginning here than the end in terms of what we can do.”

As a solution to this problem, Facebook executives are planning to put advertisements in users’ news feeds and then see how users will react to it. But the analysts are of the view that viewers will not be happy with the idea of watching advertisements on their mobile screens.

“I don’t think Facebook gets it,” said Donna Hoffman, a marketing professor at the University of California at Riverside. “They are one of the most reactionary tech companies I have ever seen. They’re not proactive, barely responsive and not in tune with the zeitgeist or needs of their own consumers.”

Nevertheless, analysts are of the view that Facebook is just a trend and probably will just pass out with time. But Zuckerberg denied the notion stating that Facebook has noticed solid growth rates in the past and that it is one of the most popular app on mobile phones.

Zuckerberg said nothing about the company’s future plans but the nullified the rumors that company is planning to build its own mobile phone. “Building out a whole phone would not make much sense for us to do,” he said.

Zuckerberg clarifies that Facebook, as a company depends on its apps partner such as Zynga for a brighter future. But the fact is that these partners are also bearing losses.

Facebook did not say anything on what are its expectations for the next quarter.

“Revenue growth is harder to predict, and it’s particularly hard to predict when you’re launching a new product,” said Chief Financial Officer David Ebersman.

Despite all, one fact is that Facebook has a good number of users, which are growing day by day. “Advertising dollars follow eyeballs,” said Arvind Bhatia, an analyst with Sterne Agee. “Facebook is a long-term opportunity.”

In its second quarter earnings, Facebook has listed a loss of $157 million, or 8 cents a share, compared to a profit of $240 million, or 11 cents a share, which company posted last year at the same time. Overall, the company has lost $743 million on operations spending, for a 63 percent loss. Facebook has $10.2 billion in cash and investments on its balance sheet.… Read the rest

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